Although the $3 increase in the minimum hourly wage will see a monthly rise of about $480 for those affected, not many people have expressed excitement about the prospect.
When Sunday Newsday spoke to minimum-wage workers in Port of Spain recently, most said the increase was “okay,” but would not do much for them, as the prices of goods and services seemed to increase “every other week.”
In his budget presentation on October 2, Finance Minister Colm Imbert said the country’s minimum wage will increase from $17.50 to $20.50 an hour from January 1, 2024, and will affect approximately 190,000 people.
He said, “(It will) increase the monthly take-home pay by over $500 per month, for workers who work a basic 40-hour week and earn the minimum wage. For those who currently work a 12-hour shift at the minimum wage for a six-day week, like some security guards, this will increase their monthly take home pay by over $900 per month."
He said this change would cost the Government at least $50 million a year.
'That money done spend'
One woman, a caretaker at a nursing home for the elderly, said most of her salary went on food and travelling to work. She said her partner paid the rent and helped her with bills.
Asked what she planned to do with the extra money, she said, “I’m glad for it and all, but it’s not really extra. I’ll just be able to help catch up on bills a bit. That money done spend.”
A clothing-store clerk said she was living on credit and by borrowing money from her friends. She said her friends knew she was spending the money on her son, so they were willing to help her and did not pressure her to repay it.
The money, she said, would go toward her son’s needs, so hopefully, she could borrow less and start paying off her debts. But she would also try to put aside $50 a month for emergencies.
A variety-store assistant said she believed the increase was fair, but it “doesn’t really make sense,” because it was not enough to do what was necessary to take care of herself and her daughter. Fortunately, she said her daughter’s father helped finance her daughter’s basic needs, which allowed her some money to meet hers.
A security guard said he did not concern himself with what the government did or did not do, because he made sure to budget, save and spend money on his son. He said the only way he could do that was because he worked taxi on evenings and weekends and had someone running a small shop at his home.
If the government "wanted people to live and feel good," he said, "they would have worked it out so people could make and spend more money.
"But no. Everything (prices) going up, but salaries staying the same, and they refuse to put some kind of price control.”
One grocery attendant said
she was homeless and did not have many expenses, so she would donate her money to the church.
She said she was happy for the money, because times were hard.
She worked at the grocery during the day, got some sleep during her hours as a security guard at night, and sold used books and small household items when she was off duty from her two jobs. She was using her money to slowly build a home.
“I will ask God to bless the money when I get paid, be contented with what I get and ask God for the wisdom to use it. Give a little to the poor and you will see the hand of God work on your behalf in every situation.”
A furniture-store attendant said the increase did not matter to him, as he lived with his parents, and did not party often. He said he was thankful for the extra money, and would use it to help his daughter, who lived with her mother, more and save.
$3 increase was the 'sweet spot'
Economist Dr Marlene Attzs told Sunday Newsday she did not believe the government would increase the minimum wage to $30, as previously proposed by the OWTU, because of inflationary pressure.
She assumed the government did its research and it believed $3 was the "sweet spot" of what it could afford and what the economy could withstand without putting too much pressure on labour costs.
In a previous Newsday article, Attzs said the impact of the minimum-wage increase would vary according to several factors, including the level of the increase, the prevailing economic conditions at the time of the increase, and the structure of the labour market.
Attzs said the increase could reduce poverty rates, increase customer spending and benefit local businesses.
But it could also have a negative impact.
“Employers, particularly small businesses, many of which may still be in a post-pandemic recovery mode, may face increased labour costs due to higher wages. These higher costs can impact their profitability, especially if they operate on narrow profit margins.
"Some businesses may respond by reducing employee hours, cutting jobs or increasing the price of their goods and services in order to compensate for the increased labour costs.”
She said employers may replace higher wage-earners with cheaper labour or raise their prices to offset the higher labour costs.
Chairman of the Confederation of Regional Business Chambers Vivek Charran said a $3 increase in minimum wage was better than nothing. But he questioned, with the country’s inflation rates and “the forex crunch,” whether it would actually make the minimum-wage worker wealthier or simply assist them in their expenses.
Some of those workers may include retail store clerks, food-service workers, security guards, janitors and maintenance workers, unskilled construction workers, mini-mart, fruit-stall and bar workers, packers, offloaders and production-line shift workers, and people in public-service starting positions.
Charran said businesses with less than ten employees may not have a problem with the increase, as long as they are generating enough revenue. But an extra $4,800 a month for ten employees could cut into a business’s bottom line, which might lead it to increase its prices.
“The key thing to note is that the cost of hiring new workers has increased, so new entrants into the job market will only be hired, or additional workers hired, if the revenues generated can support it.
"In the economy right now, small and medium business are the largest employers of minimum-wage workers across the islands. Are they growing? And are we seeing new businesses opening to absorb new entrants into the job market?”
He said if, in the end, the increase boosted stuttering commercial activity, then it was the right policy at the right time. But if it increased inflationary pressures in certain business sectors and resulted in increased food, cable and electricity bills, then it would not have mattered much.
Responding to Sunday Newsday questions by e-mail, the TT Chamber of Industry and Commerce said it expected the government to increase the minimum wage because of inflation.
“As a nation, we need to ensure that our people are supported, and an increase was necessary.”
It added that the Chamber was encouraging businesses to redesign their business models.
“A successful business isn't just about the number of employees. It's about being unique, marketing strategies, digitalisation, which can save time and energy, etc.
"Coming out of the pandemic, the world has changed, and everybody must redesign and generally, we are in the process of understanding how to redefine our business models.”